The British credit institution HSBC Holdings Plc $HSBA (+1,02 %) reported today that its fourth quarter profits were up on the previous year despite weak revenues.
- Pre-tax profit amounted to 2.3 billion dollars in the fourth quarter, an increase of 1.3 billion dollars over the previous year. The company pointed out that the increase was due to the absence of an impairment charge of USD 3.0 billion in the previous year in connection with the investment in the associated company BoCom.
- The reported profit after tax amounted to USD 0.6 billion and was therefore USD 0.4 billion higher than in the previous year.
- Quarterly sales, on the other hand, fell by 11% year-on-year to USD 11.6 billion, which is attributable to the recycling of currency losses and other provisions in connection with the sale of the business in Argentina.
- In the 2024 financial year, profit before taxes rose by 6% from 30.35 billion dollars in the previous year to 32.31 billion dollars.
- Earnings per share amounted to USD 1.24, compared to USD 1.14 in the previous year.
- Revenue fell from $66.06 billion in the previous year to $65.85 billion.
For 2025, the company expects net interest income in the banking business to be around USD 42 billion. In the 2024 financial year, net interest income in the banking business amounted to USD 43.7 billion.
In addition, an ARP of up to USD 2 billion is to be launched for 2025.
"The results show that HSBC is well positioned to survive in an uncertain macroeconomic environment," said Michael Makdad, analyst at Morningstar. He sees the share buyback program as an expected step, but rates the planned cost savings of USD 1.5 billion by 2026 as very positive.
Under the new CEO Georges Elhedery, who took the helm only last year, HSBC is increasingly focusing on the Asian market. The bank had already announced a comprehensive reorganization in October 2024, which will divide the Group into four business divisions - with a clear separation between Western and Eastern markets.
"We are building a focused, more agile bank based on its core strengths," explained Elhedery in the company's press release.
This also includes strict cost control: in addition to the general savings targets, HSBC plans to reduce personnel expenses by 8 percent by 2026. The bank recently laid off around 40 investment bankers in Hong Kong - particularly in the areas of M&A, consumer, real estate and commodities.
However, global interest rate developments pose challenges for HSBC. While the eurozone has room for interest rate cuts and the USA is holding still for the time being, an increase is expected in Japan. HSBC is forecasting net interest income of USD 42 billion for 2025 - a decline compared to USD 43.7 billion in the previous year.
"Interest rate volatility remains a key variable for our performance," says Elhedery. Nevertheless, HSBC is aiming for a return on equity in the mid-teens for the years 2025 to 2027.